FSB completes peer review of France

The peer review examined two topics relevant for financial stability in France: the macroprudential policy framework, and public disclosures of financial sector data. The review focused on the steps taken by the French authorities to implement reforms in these areas.

The peer review finds that significant progress has been made on both topics in recent years, reflecting initiatives undertaken at both European Union (EU) and national level. In particular, the July 2013 Banking Reforms Act provided the inter-agency Haut conseil de stabilité financière (HCSF) with an explicit mandate for financial stability and a broad range of macroprudential powers. Financial stability mandates were also embedded in the objectives of the Banque de France (BdF), Autorité de Contrôle Prudentiel et de Résolution (ACPR) and the Autorité des marchés financiers (AMF). The HCSF has enhanced cooperation and information sharing amongst its member authorities.1 Risk assessments have been strengthened through improved analytical tools. The authorities have expanded public communication on financial stability issues, including by using it to raise market participants’ awareness of risks. Recent legislative initiatives have addressed gaps regarding HCSF powers for information collection and to impose credit standards on non-bank credit providers, and have provided the HCSF with innovative macroprudential tools for the insurance sector.

As regards public disclosures, recent initiatives have enhanced disclosure requirements for banks, insurers and other financial institutions, supported by guidance, reviews and assessments from European Supervisory Authorities and national authorities as well as by active interaction with stakeholders. The HCSF and BdF have expanded their public reporting of conditions and risks to the French financial system, while detailed bank-by-bank data (including for 12 French banks, which account for 91% of the domestic banking sector) is disclosed by the European Banking Authority (EBA).

Notwithstanding this progress, the review concludes that there is additional work to be done:

On the macroprudential framework, this involves continuing to expand the scope of macroprudential policy in the insurance and asset management sectors; enhancing systemic risk assessments and disclosing the data, methodologies and assumptions underpinning them; and strengthening public communication on financial stability.

On disclosures, this involves adopting EBA guidance to enhance the transparency of capital treatment in complex banking groups; establishing a programme to review and follow up on reports to be submitted by insurers under the EU’s Solvency II Directive for insurance firms; and considering the publication on a regular basis of comparable insurance company information.

The peer review report includes recommendations to the French authorities in order to address these issues.